WARNING: Spoilers of a game released in 2003.
I'm writing this to summarize the information about the influence of Buddhism in Silent Hill 3. I was reading the wiki and I found out on the Closer article that the creature possess the text "南無妙法蓮華經" written in the head.[1] This is the Namu Myōhō Renge Kyō, a chanting from Nichiren Buddhism.
諸行無常
I also found out reading the wiki that, on the back of Heather's "Transcience" outfit, says 諸行無常, which is Japanese for anicca, which is one of the Buddhist three marks of existence.
In order to understand the symbolism of this Buddhist scripts, I want to write some context. Nichiren Buddhism is a form of Buddhism originated in Japan in 13th century based on the Lotus Sutra and on the teachings of monk Nichiren. It is part of the Mahayana branch of Buddhism. Due to that, Nichiren Buddhism believes that every being, including humans and deities, is trapped in an eternal cycle of death and rebirth named Samsara. Accordingly, the goal of Buddhism is to escape from the cycle, this goal is called Nirvana, and every awake being, a bodhi, a Buddha, achieves this nirvana, so the buddhas don't rebirth anymore.
What I want to point out is that Heather, the protagonist of the game, is clearly shown to be trapped on a cycle of death and rebirth, a samsara, because she is a reincarnation of Alessa Gillespie, but Heather does not possess memories of her past life, like the samsara, that is why it's called rebirth and not reincarnation.
The game presents the theme of a loop, which is confirmed and discussed in Lost Memories: Silent Hill Chronicle.[2] In Buddhism, the rebirth life gets affected by the past actions, this is known as karma. In the case of Heather, she has not solved her problems with the God of Silent Hill in her "womb" and the cult of the town, so this themes appear in her new life. The book even goes further in saying that the story is inevitably similar to her past life, from the first game, and explicitly mentions a cycle of rebirth, and states that Valtiel is an angel that governs this cycle. It adds that rotating objects from the Otherworld effects symbolise the cycle of death and rebirth, this being the reason of the fight with Memory of Alessa ocurring in the Merry-go-round.
The path to escape from Samsara and get Nirvana is not clearly established, but one way is to realize about the cycle itself. Accordingly, Heather can escape the cycle of death and rebirth by discovering that she was Alessa in her past life, so Heather does not rebirth again.
In addition, due to Buddhism believing the deities are also trapped in the cycle, it can be said that the God of Silent Hill, that tries to be born through Alessa, is also trapped in the cycle of death and rebirth. This could answer the question of what Heather saw in the end of the game, which is potentially the fetus of God, which has rebirthed after dying, which would imply that the God of Silent Hill possess karma due to his bad actions and has not gotten nirvana. Of course this is true supposing that the God of Silent Hill is a real deity and not a delusion from the Otherworld effects.